International Economics: Trade and Specialization

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What is the primary characteristic of international trade?

Bartering goods within a local community
Focus on domestic markets only
Production within a single country
Exchange of goods and services between countries (correct)

What does the internationalization of production refer to?

A company conducting production across national borders (correct)
Production limited within a company's home country
The process of trading goods internationally
Focusing solely on exporting finished goods

International trade, combined with the internationalization of production, leads to what?

Mobility of capital at a global level (correct)
Focus on local markets
Increased national self-sufficiency
Decreased interdependence between economies

What is a key reason why different countries engage in international exchange?

To exchange with non-residents of other countries (A) Signup and view all the answers

According to Adam Smith, when can a product be exported?

When the manufacturer has a lower price. (D) Signup and view all the answers

What does the Heckscher-Ohlin-Samuelson (HOS) model explain?

A country's comparative advantage based on abundant factors. (C) Signup and view all the answers

What is a key aspect of a country having a comparative advantage?

Having a relatively weaker opportunity cost in producing a good compared to another country. (C) Signup and view all the answers

What economic strategy was followed by Asian countries like Japan?

Abandoning low-value production and accumulating capital. (B) Signup and view all the answers

What does the economic development of China validate?

The Heckscher-Ohlin-Samuelson model. (A) Signup and view all the answers

What is 'intrafirm' specialization explained by?

A combination of factors. (C) Signup and view all the answers

What type of international commerce involves the exchange of goods or services between different industries?

Branche (D) Signup and view all the answers

Which term describes the exchange of similar but differentiated goods within the same industrial category?

Intra-branch (A) Signup and view all the answers

What kind of product differentiation involves variations in design or color, but with similar characteristics?

Horizontal differentiation (B) Signup and view all the answers

Which term describes product differentiation based on quality or features, often seen in high-end products?

Vertical differentiation (C) Signup and view all the answers

What is defined as a country's capacity to attract Foreign Direct Investment (FDI)?

Competitiveness (A) Signup and view all the answers

Which of the following is a benefit of international trade for consumers?

Access to a wider variety of goods and services (D) Signup and view all the answers

How does international trade impact the prices of goods?

It lowers prices due to increased competition. (C) Signup and view all the answers

What effect does international trade have on economic growth?

It stimulates economic growth by promoting exports and job creation. (C) Signup and view all the answers

Which of the following describes a potential negative impact of international trade on domestic industries?

Favoring some sectors while others suffer from competition and relocation (D) Signup and view all the answers

How does international trade affect the environment?

It increases transportation, potentially raising carbon emissions. (A) Signup and view all the answers

What is the primary goal of free trade?

To eliminate barriers to trade. (C) Signup and view all the answers

Which of the following is a potential consequence of protectionism?

Higher prices for consumers. (D) Signup and view all the answers

What is one potential advantage of protectionism?

Protection of nascent industries. (A) Signup and view all the answers

What is a potential negative impact of free trade?

It can lead to job displacement. (C) Signup and view all the answers

What does protectionism aim to do?

Limit imports. (B) Signup and view all the answers

According to classical economists, what primarily justifies free trade?

The specialization of countries (A) Signup and view all the answers

What is a key factor explaining why countries with similar economies still engage in international trade?

Differentiation of products (D) Signup and view all the answers

Which of the following contributes to a country's competitiveness in international trade?

The productivity of firms (D) Signup and view all the answers

What is a potential effect of international trade on prices?

Reduction in price (C) Signup and view all the answers

Which of the following is an argument for protectionism?

Promoting domestic employment (A) Signup and view all the answers

International Trade

Exchange of goods/services between countries.

Internationalization of Production

Company's production occurring across borders.